The latest intelligence report on Libya by Menas Associates says tensions are rising in the troubled North Africa’s oil sector. According to the report, existing tensions between Minister of Oil and Gas, Mohamed Aoun, and National Oil Corporation’s (NOC) Chairman, Mustafa Sanalla, have escalated in recent days.
The political risk consultancy reports that on August 24, Aoun said he was appointing Jadallah al-Awkali, one of the NOC’s board members and the Brega Oil Marketing Company chairman, as the corporation’s interim chairman because of Sanalla’s absence from the country.
Al-Awkali according to the Menas report, replied that he could not take up the position because Sanalla, who is on official overseas travel, is continuing to fulfil his role from outside the country. In the past Aoun has claimed that Sanalla requires the ministry’s permission in order to travel abroad officially.
‘’Aoun — who had previously served in the unofficial parallel eastern Libyan government — knows that he probably cannot replace Sanalla but may be seeking to bolster the current efforts of the House of Representatives’ speaker Aguila Saleh to undermine Prime Minister Abdelhamid Dbeibah’’, the report says.
If correct, then one would expect the latter to lose confidence in his minister and fire him. There may, however, be other things at play, including the efforts to try and co-opt eastern individuals during the Government of National Unity’s (GNU) formation earlier this year.
In other words, while Aoun may be undermining Dbeibah, sacking him could make relations with eastern Libya even worse.
On August 26, the NOC’s Arabian Gulf Oil Company (AGOCO) subsidiary reported that it had become unable to carry out its operations because of insufficient funds. It claimed that, amongst other problems, it has suffered from a lack of necessary spare parts and equipment and would therefore be ‘’forced to suspend all activity and business unless it is provided with the funds needed to operate production.’’
If AGOCO does halts its operations, as much as 300,000 b/d, or around a quarter of the country’s total production would be affected. AGOCO did not provide details about when it would have to cut its output which perhaps suggests that it sees this very public threat as a bargaining chip, which is a common tactic to the vagaries of Libyan politics.
It is clear that, despite the early optimism about the resurgence of oil production, Libya’s oil sector is currently in crisis because of both, the Aoun-Sanalla rivalry, and the House’s refusal to pass a 2021 Budget that is large enough to rehabilitate the oil sector’s infrastructure.
Dbeibah’s attempts to mediate between Aoun and Sanalla by appointing Rifat al-Abbar as Deputy Minister for Oil has apparently not worked. AGOCO’s threats to reduce production could actually be coordinated with Aoun as a way to put pressure on Sanalla.
The Benghazi-based AGOCO has previously partnered with various eastern political figures to apply pressure on the NOC and it is unlikely that these issues will be resolved in the near future.